Jake Falcon, the founder of Falcon Wealth Advisors, joined Cheddar News to give some tips about student loan repayments.

What to Know About Student Loan Repayments

And now it's time for our segment stretching at your dollar where we give you tangible tips to help you make the most of your money, especially in this environment. Well, whatever the outcome and Supreme Court, with the fate of President Biden's student loan forgiveness plan, millions of Americans will have to repay the debt later this year. And with the cost of living soaring mid inflation, borrowers need to prepare as soon as possible for when that day comes. So joining me now is Jake Falcon, founder and advisor of Falcon Wealth Advisors. Jake, thanks for coming on the show. What are some steps that student loan borrowers should be taking to prepare? Well, thank you for having me Kristen and this isn't something many student loan bars are excited about, but there are some great things you can do. Number one, we would suggest that you start redirecting some of your monthly cash flow and the amount that you estimate to have to repay into a money market fund savings account somewhere out of sight and out of mind, what this will allow you to do is check in on your cash flow and see if you are running at a deficit or if things are tight after that, then you can truly define what are your values and is your money properly lined up with those values? The second quick tip I have regarding what you can do now is check in with your loan provider. The last thing you want is for your repayments to start up and you have a different bank account, a new address. So make sure all of your contact information is up to date and that you understand the terms of your repayment. Is it possible jake in any scenario for people to put payments on hold? It is you can certainly apply for what's called deferment or forbearance. Now remember when you do this, you're ultimately just kicking the can down the road, you're still gonna have to pay the money back. But if you need some temporarily relief, you certainly can apply for that. But again, it's subject to approval from your student loan. Are there other repayment plans that might offer a lower monthly payments? Jake that our viewers should look into? Yes, that's a great question. Most people when they apply for a student loan are set up on the standard plan, which is a 10 year time horizon. You can actually extend that and you want to go to student aid dot gov and look at different options. Maybe you can push that out 20 or 25 years. Again, you may ultimately end up paying more money back in the form of interest. But again, if you need that relief now and want to lower those payments, that may be an option for people. Any other forgiveness options out there, jake there are, if you work in the public sector for the government or nonprofit, you may be eligible through the public service loan forgiveness program to get some forgiveness. There. Also, there's a program for teachers and also if you have a degree and you're an industry where perhaps your income isn't as high as you expected. Sometimes you can apply for something called an income driven repayment schedule where they'll base those repayments on your income. Again, these aren't a one size fits all and you do need to apply for them. But there are options available is filing for bankruptcy and option jake. Is that something people should consider if they do find themselves struggling to make these payments? I don't like that particularly for young people and you certainly have that as an option, but it's not an automatic that it will be forgiven. There's another program out there called the Fresh Start program. That may be a better alternative Christian for this. Uh for example, it may help you avoid creditors or be still eligible for a mortgage. So I would certainly look at other alternatives before filing bankruptcy. We typically use that as basically the last resort, but I wouldn't, I wouldn't start with that at all. Okay. That's good to know. Well, we know repayments, as I mentioned earlier, Jake set to resume. How should borrowers prepare as those repayments are set to kick back in. Yeah, number one, if you're working with a fiduciary wealth advisor, you certainly want to check in with them and start to look at your plan and develop a plan for this new cash flow. Don't forget to pay yourself first. There can be a balance between paying off debt and saving for your future, whether that's in your 401k or your Roth Ira, we certainly don't want to see somebody stop saving for their retirement because they have student loans. Um You know, you can categorize your interest, also pay off your high interest first and categorize what's most important so that you pay the least amount and interest. Um And then also Kristen, I did want to bring up that with unemployment numbers still being very low. It could be an opportunity to ask your employer for a raise or go out in the job market. If you're tight on your budget, maybe this is time to get a new job paying you more money to help with this cast. Jake Falcon, founder and advisor of Falcon Wealth Advisors. Jake. Thank you.